Even as their scheme collapses, they continue to be hit with sanctions. This week, Hansmeier and Steele got hit with a big one. US District Judge John Darrah oversaw litigation related to one of Prenda's most audacious moves—their defamation lawsuit against their critics. They sued Steele's former housekeeper, Alan Cooper, and his lawyer, Paul Godfread, for accusing Steele of identity theft. For good measure, they also sued anonymous blog commenters who called Prenda attorneys "brain-dead" and "assclowns."

The defamation lawsuit resulted in a $12,000 sanction, but Godfread and Cooper also pushed an anti-SLAPP case against Hansmeier and Steele. Now that has resulted in Prenda's largest sanction yet—a sanction order for more than $600,000.

Judge Darrah granted Godfread and Cooper the full $162,448.74 in attorneys' fees they asked for, plus the earlier sanction of $11,758.20. Then Darrah tacked on $500,000 in punitive damages as well.

Whether the damages and sanctions will actually be paid is an open question. As stated above, both men are reportedly facing criminal investigation and have already paid out multiple sanctions. Paul Hansmeier filed for bankruptcy shortly before he gave up his law license.